Representative Tim Bishop has issued a statement in support of the Helping Families Save Their Homes Act which was approved by the U.S. House of Representatives. The bill, which is aimed at abating the flood of foreclosure homes in the county, is now on the Senate for consideration.

The measure is expected to be an integral part of the Homeowner Affordability and Stability Plan of President Barack Obama.

The Bishop-supported bill will focus on providing ways to address foreclosure homes problem and boost the availability of mortgage credit by allowing bankruptcy judges to modify loans for distressed homeowners who filed for bankruptcy protection.

The measure is expected to boost mortgage refinancing to stop foreclosure homes increase by giving flexibility on loan modifications, reducing fees and providing incentives to mortgage lenders who choose to refinance instead of adding to the growing list of foreclosure homes.

According to the Mortgage Bankers Association’s (MBA) National Delinquency Report, mortgage delinquencies and filings for foreclosure homes posted an 11 percent increase during the fourth quarter of 2008.

The number of mortgage loans at least one month behind in payments but not yet in the foreclosure process jumped by 8 percent, representing a 13 percent increase from the previous quarter.

The MBA data also showed that the number of foreclosure homes increased by 3.3 percent during the fourth quarter of 2008, representing a 1.26 percent jump from the previous year.

Meanwhile, data from Bishop’s office showed that housing prices declined 18 percent during the fourth quarter of 2008 and over 14 million troubled homeowners owe more mortgages than the fair market value of their distressed properties.

Bishop said that stabilizing and strengthening the housing industry is crucial to the recovery of the U.S. economy. He pointed out that foreclosed homes reduced the value of neighboring properties by almost 9 percent and every American will suffer if house prices will continue its rapid decline.

He added that the bill does not require spending federal money to be able to help thousands of distressed homeowners who are facing the threat of losing their homes to foreclosure.

The Homeowner Affordability and Stability Plan includes measures to reduce mortgage payments for an estimated 9 million struggling homeowners and expand the role of Federal Home Loan Mortgage Corp. and Federal National Mortgage Association in stopping foreclosures.

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Another Stopgap for Flood of Foreclosure Homes

The Illinois Department of Human Services (IDHS) and the U.S. Department of Housing and Urban Development (HUD) have signed the Neighborhood Stabilization Program (NSP) agreement aimed at helping distressed neighborhoods reduce the number of foreclosure homes.

The program will provide emergency assistance of $53 million to non-profit organizations, developers and the local government to acquire, rehabilitate or resell abandoned and vacant foreclosure homes that become eyesores within communities.

IDHS has partnered with the Illinois Department of Commerce and Economic Opportunity (DCEO), Illinois Housing Development Authority (IHDA) and affordable housing advocacy groups to rehabilitate neighborhoods and assist in the housing needs to reduce the number of foreclosure homes that have caused communities to deteriorate.

Illinois is the sole state that will use as much as 40 percent of the allocated HUD grant for neighborhood developments to provide affordable housing for low-income families and accessible homes to persons with disabilities.

Under the program, IDHS will allocate funds to neighborhoods with high number of foreclosure homes, provide rental housing units that are affordable and opportunity for low-income families and those with disabilities to own properties.

The program is part of a federal campaign to rehabilitate communities showing signs of deterioration due to the surge of foreclosure homes by providing opportunities to rent or own affordable homes.

The IHDA is tasked to provide mortgage finance and housing development expertise and will work with IDHS to start rehabilitating foreclosure homes to be used by low-income families and people with disabilities.

According to Carol L. AdamsSta, IDHS secretary, foreclosure has a way of wreaking havoc to homeowners and communities and caused the rapid deterioration of areas affected.

She added that IDHS and other state agencies will start taking measures to address the problems brought about by foreclosure properties by providing the needed resources to help neighborhoods recover from the foreclosure crisis.

The program, made possible by the Housing and Economic Recovery Act of 2008, will also allow grant recipients to develop financing products to assist homebuyers in low and moderate income levels to acquire foreclosed homes. Qualified homebuyers are those with 120 percent area median income established by HUD.

Illinois is currently accepting proposals for the federal program. It will also host several workshops to promote awareness of the program and assist potential applicants.

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Aid for Illinois Neighborhoods to Address Foreclosure Homes

Last February, President Barack Obama announced his $275 billion anti-foreclosure homes plan intended to help nearly 5 million owners of distressed properties.

The anti-foreclosure homes plan was welcomed with much hope by the housing industry and millions of distressed borrowers, but not by some troubled homeowners in Washington who regard the program as too late the hero.

As of December 8, 2008, there were 172 homeowners in King County, Washington who received foreclosure homes notices. These figures indicated that the flood of foreclosures is continuing its destruction across the country despite various campaigns to stop its assault on the lives of millions of Americans.

A typical distressed homeowner in Washington may receive a trustee sale notice even if he just had $4,868 overdue mortgage.

Washington State Department of Financial Institutions director Scott Jarvis said that once distressed homeowners received foreclosure homes notices, it is already late to help them pull back their properties away from foreclosures.

On a positive note, Washington still fares better than other states with the number of foreclosure homes lower than the national rate and way below the foreclosure rates of Arizona, California, Florida and Nevada.

However, even if the number of foreclosure homes in Washington is not that remarkable compared with other states, the figures are still unprecedented in the area. Data from the Mortgage Bankers Association showed that the number of distressed properties in Washington reached 1.19 percent from July to September 2008, twice the historic 0.61 percent foreclosure rate in the state.

On the other hand, foreclosures created a flood of low-priced houses in Puget Sound Area, Washington. The average mortgage loan is about $262,500 and two out of three mortgages are for houses $350,000 and below.

Back in King County, one in every five distressed borrowers owe back payments of not more than $10,000 and foreclosures affect 28 out of 39 cities in the county.

Some communities with the most number of repossessed homes are Maple Valley and Tukwila with 8 each, followed by Federal Way and Kent with 7 each.

Meanwhile, some homeowners in the state who remain current on their mortgages but are struggling to make payments are putting their hopes on Obama’s foreclosure prevention program which will provide $75 billion for loan modifications.

They hope that the program would rescue them from their current dire situation and help them remain in their properties.

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Anti-Foreclosure Homes Plan Too Late for Some Families

The combined number of defaults and mortgage loans in foreclosure process has now reached its highest level of 11.18 percent, according to the Mortgage Bankers Association’s (MBA) National Delinquency report.

According to the MBA report, the percentage of homeowners who are behind on their loan payments for at least a month increased by 8 percent during the last quarter of 2008. The figures are the highest recorded by MBA since it started monitoring foreclosure homes rate in 1972. The last quarter data represented a 13 percent rise from the third quarter.

MBA chief economist Jay Brinkmann explained that subprime adjustable-rate mortgage loans and prime adjustable-rate mortgage loans still accounted for majority of loans on default and the increasing foreclosure homes rate.

He added that across the country, 48 percent of subprime adjustable-rate mortgages were one payment behind, while in Florida, 60 percent of subprime loans were on default for a month.

Meanwhile, the number of foreclosure homes filings increased to 3.3 percent, representing about 1.5 million houses at risk of falling into foreclosures.

The 3.3 percent increase in the number of foreclosure homes filings during the last quarter of the previous year represented a 0.33 percent increase from the previous quarter and 1.26 rise from 2007.

On the other hand, Brinkmann noted that the number of troubled loans languishing on the foreclosure market has remained significantly high because of the moratorium on foreclosure sales in several states, the suspension on foreclosure sales by Federal Home Loan Mortgage Corp. and Federal National Mortgage Association and reluctance of mortgage services to evict owners of foreclosure homes.

He pointed out that because of the foreclosure moratorium, the number of mortgage loans due 90 days and more increased to 3 percent in the last quarter from 2.2 percent the preceding quarter.

If there was no moratorium, these troubled mortgages would have been dealt with immediately by lenders by completing the process of foreclosure.

Harvard University’s director of Joint Center for Housing Studies Nicholas Retsinas said that the MBA report reinforced what industry experts have been asking for a long time now, a foreclosure relief plan that will successfully streamline the number of foreclosure homes and stabilize the housing market.

Industry experts viewed Obama’s foreclosure prevention plan as another attempt to decelerate the foreclosure rate but doubted if it will ever solve the housing crisis.

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1.5 Million Houses on the Brink of Foreclosure

There is no good in being left clueless after foreclosure. Here are some pointers that can help you survive a foreclosure situation:

• Find out whether your state implements a redemption period. After the foreclosure sale, homeowners are given the period of a few days to a month or even longer. During this period, you cannot be evicted from the house even if the property already has new owners. You are given the chance to get your foreclosed property back provided that you pay your mortgage liabilities completely. The buyer of your home will be given a refund of the amount he paid during the auction.
• Some states do not practice a redemption period. In such case, even if you do not have the chance to get your foreclosed home back, you still can stay in it. The eviction period can be short or long, depending on the laws in your local area. The new owner of the foreclosed property has the responsibility during eviction.
• In case no one buys your property during the auction, your home will end up in the possession of the bank. This can prove to be more advantageous than when the foreclosed home is bought at auction. Banks are big companies and transactions in such huge organizations tend to move at very slow pace. That means another few months for you to stay in your home especially since evicting you is not among the top priorities of the bank.
• Evictions undergo legal processes. In almost all cases, the court is involved in eviction. That gives room to more delays of a few days to a couple of weeks. However, you still have to act fast as you would not have much time after the eviction is permitted.
• The moment your foreclosed house is sold during the auction, immediately find a new place. Things happen faster after the eviction is approved. Notices last for only one to three days. If you do not want to find yourself in the streets, you have to make plans fast.

Before you get to a dead end, you still have plenty of opportunities to stop foreclosure. However, if you find yourself trapped in a foreclosure situation, to act ahead of time and be prepared is the best way to go.

Related Information:

• Foreclosure News
• Tax Foreclosure Properties
• Tax Foreclosures
• Cheap Houses for Sale
• Florida Foreclosures

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What to Do After Foreclosure

The rise in new foreclosure filings in Chicago in 2008, as reported by nonprofit group National Training and Information Center, put Illinois high on several lists of the ten U.S. states with the highest foreclosures by state in 2008. Total foreclosure filings reached 19,943 in 2008, an increase of a record 87 percent from filings in 2006.

In January 2008, according to RealtyTrac’s foreclosure report, Illinois is still among the U.S. States with the highest foreclosures by state. Illinois had 7,484 default notices, 4322 foreclosure sale notices and total foreclosure filings of 14,447. Included in the total are more than 2,000 units which are real estate owned properties, assets that have been foreclosed and repurchased by the banks. The state’s foreclosure rate is one foreclosure filing per 363 residential properties. These figures put Illinois fourth in RealtyTrac’s ranking of foreclosures by state and sixth in terms of foreclosure rate for the month of January.

One of the major reasons for Illinois’ high ranking in listings of foreclosures by state in 2008 is a record increase of foreclosure filings in Chicago neighborhoods previously immune to foreclosures. Almost 20,000 foreclosures were filed in Chicago due to defaults in middle-class and moderate-income communities. Another major reason is the use of exotic but risky loan schemes in mortgages. According to National Training and Information Center, mortgage loans in Chicago failed because 75 percent of them used risky loan schemes such as adjustable-rate loans.

Communities that contributed much to the high ranking of Illinois in terms of foreclosures by state are O’Hare, which increased in filings by 676 percent compared to 2006 filings; Dunning, which had an increase of 377 percent; Albany Park, an increase of 374 percent; Lincoln Square, an increase of 366; Irving Park, an increase of 344 percent; Norwood Park, an increase of 271 percent; Rogers Park, an increase of 268 percent; West Lawn, an increase of 256 percent; and Hyde Park, an increase of 105 percent.

The high ranking of Illinois in listings of foreclosures by state prompted U.S. Senator Dick Durbin, who comes from Illinois, to introduce and campaign for his bankruptcy legislation that would help borrowers save their homes from foreclosure. Durbin’s bill enables homeowners to have their mortgage loans modified for affordable payments.

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Chicago Put Illinois High on Lists of Foreclosures by State

A couple of years ago, before the foreclosure crisis started, the foreclosure factor was not included in real estate appraisals even if there were also tax foreclosure properties then. The number of lender foreclosure properties then plus the number of tax foreclosure properties were not so high to have an effect on home prices.

Nowadays foreclosures have to be considered in appraisals. In 2008, foreclosures across the country increased by more than 80 percent to 2.33 million units, pulling down home prices to bottom levels and requiring appraisers to factor in foreclosures when making appraisals. Whereas before tax foreclosure properties did not figure in appraisals, nowadays they figure because of the soaring number of lender foreclosures.

According to Arizona appraiser Jeff Harper, the Yuma housing market is being pulled down by foreclosed properties and short sales.

He said previously foreclosure figures were negligible so their values were not used in appraisals. Nowadays, anyone planning to sell a home will have to compete with the low prices of foreclosed properties. Perhaps tax foreclosure properties are still an anomaly these times compared to lender foreclosures, but they add to the foreclosure figures.

Nevertheless, Harper said there are still well-maintained homes that get good prices, especially turn-key houses that appeal to certain buyers. But generally, he said, home prices are declining, with a home priced $250,000 about six months ago being currently priced at $225,000. Appraisals for tax foreclosure properties have also been declining.

Harvey Campbell, a broker with Broken Arrow Realty, cited cases in which a developer gets a sale, builds the house with the contract price in mind, but then the appraisal results in about $20,000 through $50,000 lower than the contract price. Either the developer gives up those thousand dollars or keeps the house and gives back the earnest money to the buyer.

Meanwhile, Bill Craft, head of Wells Fargo Home Mortgage in Yuma, said lower appraisals have not been a problem at Wells Fargo because sellers have become realistic about their prices. They know how lender foreclosures have affected the market and they know there also tax foreclosure properties out there.

Craig has also become optimistic about the housing market. He said foreclosed homes on the listing service are now much fewer than in November 2008 when the figure even reached 1,540 units.

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Appraisals and Tax Foreclosure Properties

Obsolete foreclosure laws have been aggravating foreclosures by state, according to the National Consumer Law Center (NCLC). Foreclosure laws or the lack of homeowner protection laws have been protecting other parties, such as lenders and renters, much more than homeowners.

One of these obsolete laws is the fast-track foreclosure law, which give mortgage lenders the right to force out defaulting homeowners of their homes and then sell the homes immediately through auctions even without filing foreclosure notices with the courts. The homeowners have the right to question the lenders’ actions, but lack funds to pursue their claims. This law is in effect in 30 U.S. states and in the District of Columbia, hastening the rise in foreclosures by state.

Another is the lack of law giving borrowers the right to notification of foreclosure. In the District of Columbia and in 33 states, lenders are not required to deliver foreclosure notices to homeowners before the foreclosure process is started. This again hastens the increase in foreclosures by state.

The third factor is the lack of law requiring lenders to find at least one alternative before proceeding with a foreclosure. With the exception of only Connecticut and California, all states allow mortgage firms to foreclose defaulting loans immediately without exploring ways with borrowers how they can save their homes. Naturally, increased foreclosures by state is the result of this factor.

Next factor is the right of the lender to disregard last-minute efforts to pay past dues, penalties and interests. The lender can go ahead with the foreclosure and sale of a home even if the borrower provides the money to update payments. This is in effect in 29 states, again another factor aggravating foreclosures by state.

One of the things that directly increase the burden of borrowers are the stiff penalties and fees that lenders add to the borrowers’ balance once they fall behind in payments. All states, with only three exceptions, allow the imposition of penalties and fees immediately. Expectedly, foreclosures by state increase quickly because homeowners drowning in debt are further pushed down by additional fees. The only states with laws against immediate imposition of penalties are Pennsylvania, New Jersey and Massachusetts.

After a foreclosed home is sold, the former homeowner is still not safe. Mortgage lenders in 36 states can still file a claim to recover from the homeowner the difference between the loan balance and the auction proceeds.

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Obsolete Laws Worsen Foreclosures by State

In this down housing market, you can still make money by flipping residential properties. You just have to increase your know-how on good locations, available capital, mortgage lenders, home prices and the risks involved.

The number of Florida foreclosures has made the state among the best places for individuals looking for bargain real estate investments. Before the housing meltdown, Florida, California and Nevada were among the hottest housing markets. These times of the meltdown, they can still be the hottest markets depending on your skills.

According to California-based foreclosure tracking firm RealtyTrac, the 2007 foreclosure rates soared to higher levels in 2008, leaving hundreds of thousands properties foreclosed and made available for sale. Among these are Florida foreclosures ripe for the picking.

Angie Hicks, owner of consumer service research site Angieslist.com, said an informal survey of its list members in 2008 found that of the 29 percent who bought homes within the six-month period of the survey time frame, 95 percent said they made profits from their home purchases.

The first key to investment success during this downturn is to make your own research, according to Hicks. Research the neighborhood, know the prices, compare prices and research development projects in the area. Among Florida foreclosures, look for units in neighborhoods that have community development projects.

Emma Allen, chief executive officer of Emma Allen Enterprises, says it is better to concentrate on an area that you know very well. She says she looks for bargains in communities where she herself would like to reside. Areas currently being rehabilitated with urban renewal projects are great opportunities. Allen’s advice fits investors looking for bargains in Florida foreclosures.

The second piece of advice is to check your available capital. Factor in renovation costs and carrying costs while you are looking for buyers. Remember also that you must pay the monthly amortizations while the mortgage is in your name. Make projections in case you can not sell the house within two or three months. If you are flipping Florida foreclosures, you may find great bargains, but factor in the average number of months a house is sold in the area.

Another advice is from veteran California flipper Nicole Sassaman. She says you need to have a cash reserve in the bank equal to 25 percent of the home price and about 18 months of house payments.

Home flipper Scott Patterson says you try to make low offers on targeted properties. He cites one example where he bought a $100,000-priced home for $80,000 and then sold it for $160,000 after some renovations. For Florida-based flippers, lots of low-priced homes can be found among Florida foreclosures.

Related Information:

• Foreclosure News
• Tax Foreclosure Properties
• Tax Foreclosures
• Cheap Houses for Sale
• Foreclosure Listings
• Foreclosure Homes

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Earn Money by Flipping Florida Foreclosures

The new bankruptcy law that is set to pass legislation would let judges cut down interest rates and reduce values of principals for home loans in a bid to curb foreclosures by state. This bill has been in the drawing boards for two years and failed to see light as Republicans and the Bush administration have opposed the change. Now that more Democrats are taking seats in the House, and President Obama giving his support, the new bill is scheduled to pass legislation.

The proposed bill is facing tremendous opposition from major banks and the mortgage industry. However, with the probability of the bill becoming law on the high side, these major banks are changing their tactics and approach and are now trying to influence the revision on some key revisions.

Proponents of the bill are confident that these changes will force banks and mortgage providers to work with homeowners to try and modify their loans and prevent foreclosures by state. This would be a good alternative to settling the mortgage issue in the bankruptcy court. However, the contention of mortgage industry experts is that this new bill will eventually result in higher interest rates and processing fees. The new bill will create greater risks and unpredictable costs for banks and mortgage companies and they will have no resort but to pass this to the consumer.

President Obama has already declared the new law as part of rescue program for the foreclosure crisis, and this is strongly supported by Democrats and other consumer advocates who believe the new law is crucial in stemming the tides of foreclosures by state. With this majority support, the new bill is most likely to pass legislation despite continuing opposition.

Banks have no resort but to bow to the political pressure scram to get a seat at the decision table. Citigroup has taken this step and have cut a deal with Democrats that the new law would apply only to existing loans before promulgation, and would apply only to homeowners facing foreclosures by state who are actually working with their mortgage providers for loan modification before resorting to Chapter 13. Other banks are proposing a limit to the kind of home loans the law is applicable, although they still continue to oppose the bill – the same bill, which they spent millions to block last year.

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Banks Scramble to Prevent New Law Addressing Foreclosures by State